It’s Evans above after Drapers Gardens triumph

Friday 3 December 2010 12:01 BST

In Old Burlington Street, Mayfair, on Monday I have a chat with three affable chaps who control over £4 billion of property, including half the Gherkin: chaps who stunned bigger competitors last month by snatching a 292,000 square foot office block at Drapers Gardens in the City from under everyone's nose.

Mike Evans, 57, is chairman of Evans Randall, a 22-strong investment bank he founded in 1993. His Kiwi lieutenants are chief executive, Kent Gardner, 39, and chief financial officer, Paul Kendrick, who is 50. Evans Randall only began buying real estate in 2005.

The latest deal is the £242.5 million purchase of offices let to rock-solid asset manager BlackRock until 2035.

"The Drapers deal felt pretty good," says Evans. "There are few transactions which give you a 25-year lease. We think City rents could grow by 13% in the next five years."

BlackRock, perhaps unwisely, agreed to upward-only rent reviews of 2.5%-4.5% per year. If the current rent of £46.50 per square foot compounds up by 13% in 2015, Drapers will be worth more than £242.5 million.

But how did Evans Randall raise the money and beat stiff competition for the redevelopment?

"Everyone wanted Drapers Gardens," said one slightly goggled-eyed agent. "Don't ask me how Mike Evans did it, but as long as City rents rise, it will be a good deal. If they don't, well"

Evans is not saying who stumped up the £36.5 million of equity set alongside the £206 million of debt provided by German bank Eurohypo and giant US fund manager Pramerica. But if you are wondering who would be tempted by promised returns of 12% to 15% on deals like this, wonder no more; enter a world where Premier League footballers would be classed as poor.

"We seek out what you might call ultra-high-net-worth individuals," says Evans. Er how much do you need before Evans Randall will let you though the door at Old Burlington Street. "We like to deal with those who can invest £5 million to £10 million, time and again," he says.

Time and again, phew! Those who provide debt don't do badly either. Pramerica will eventually be paid 13.5% interest on its £36 million mortgage, which tops up the Eurohypo loan of £170 million. That pays the Germans 1.95% above Libor in interest. Both will no doubt be in for a slice of the profits.

Evans Randall makes its profits by co-investing and charging arrangement fees of around 1% of the purchase price, plus management fees of half that. How much Evans, Gardner and Kendrick have made from real estate in five years will remain a mystery, as the accounts of the private bank remain private. As will the secret of how they beat the competition.

You're hired: Wardrobe sold by Sugar to the Sabba family ends up doing its bit for society

Alan Sugar extracted a high price from the Sabba family for three houses in Wardrobe Court near St Paul's a few years ago.

So The Apprentice master will be happy to know the final phase of 92 serviced flats unlocked by that deal was finished this week.

His lordship might also be pleased to hear that 32% of the development is owned by a Jewish charity set up by Sam Sabba decades before he died in 2005, aged 100.

He first bought into the spot in 1950. His five children now control Warnford Properties, run by Richard Ashby. The family is now to build 24 luxury flats at 82-84 Piccadilly, a spot where Sabba also invested in 1950.

Will Ashby cash in on rising prices by selling the Wardrobe flats in 2015, when the contract with operator BridgeStreet expires? "No we'll just keep the serviced flats, thanks." Property can be a game of patience.

To dinner with New York planning commissioner Alfred C Cerullo III. Fred also runs the Grand Central Partnership, dedicated to improving New York's Midtown.

Also at the table was Alistair Subba Row, a man dedicated to improving London's midtown from his Holborn vantage point, running property agent Farebrother.

Fred was in town to speak at a dinner at the Savoy, attended by London's midtown business boosters. On the menu there was the coming master plan for London between the West End and the City.

Planner Sir Terry Farrell has already dreamed up a Las Ramblas concept for the Euston Road. The big question: how to turn the dull thoroughfare from Holborn Viaduct to Holborn station into a café-lined bower for rambling pedestrians without driving cabbies crazy?